An overseas company wishing to conduct foreign company registration in Kenya by opening a branch office or how to register a subsidiary company in Kenya should deliver the following to the Registrar of Companies:
The New Companies Act 2015, has not been implemented because of the contentious issue of local shareholding requirement. According to the 2015 Act, a foreign company shall not conduct business in Kenya unless it is registered in Kenya, or has made an application for registration in Kenya but the application has not been finalized within the stipulated period. Conducting business, in this respect, is defined to include, but not limited to, offering debentures in Kenya or being a guarantor for debentures offered in Kenya. Thus, for a foreign company to offer a debenture in Kenya or even be a guarantor for a debenture offered in Kenya, the foreign company must be registered in Kenya. An application for registration as a foreign company in Kenya under the 2015 Act will be lodged with the Registrar of Companies.
The application will contain information to be prescribed published regulations and comply with the requirements with regard to the company’s name and the appointment of a local representative and be accompanied by the prescribed fee and the required documents.In the application for incorporated as a foreign company in Kenya, the company may specify the name under which it seeks to carry on business in Kenya. This may either be the name of the company under the law of the country or territory in which it is incorporated or an alternative name, other than its corporate name, which the company desires to be its corporate identity in Kenya.
The new law requires a Foreign limited liability companies require 30% Kenyan local shareholding and an office in Kenya.
Briantony International Consultants can help by offering nominee shareholder agreement where we hold the 30% shares in trust risk free at a reasonable fee. A foreign company is also required to appoint a local representative in Kenya who not only receives service of process but also ensures that the foreign company complies with the requirements of the law. The local representative is personally liable if a penalty is imposed on the company for a contravention or failure to comply with the Act, if the court hearing the matter is satisfied that the local representative should be so liable.
All these forms are requisite requirements for
Briantony International Consultants upon a successful submission of the required documents for registering a foreign company will facilitate the issuance of a “Certificate of Compliance” to the Company by the registrar of companies. We also offer PIN and VAT Registration services in Kenya. The whole Foreign company registration process in Kenya will take only 7 days if you use Briantony International Consultants services. We make Company registration in Kenya for foreigners a simple process and not complicated at all.
This process is also known as Formation of a foreign company in Kenya or incorporation of a foreign company in Kenya or Registration of multinational companies Kenya is not costly when using our services. We can also be able to obtain list of international companies in Kenya from registrar of companies Kenya.
The list of international companies in Kenya and multinational companies in Kenya is endless.
IMPLICATIONS OF THE NEW COMPANIES ACT 2015 AND INSOLVENCY ACT 2015
The New Act has more detailed disclosure and compliance requirements for companies which are formed outside Kenya that want to register their business in Kenya.
Requirements for Registration of a Foreign Company under the new 2015 Act
In accordance with 2015 Act, a foreign company cannot conduct business in Kenya unless it is duly registered in Kenya, or an application is pending for registration in Kenya but the application has not been processed within the prescribed period. Conducting business, in this regard, is defined to comprise of, but not limited to, offering debentures in Kenya or being a guarantor for debentures offered in Kenya. For a foreign company to offer a debenture in Kenya or even be a guarantor for a debenture offered in Kenya, the foreign company must be duly registered in Kenya.
An application for registering a foreign company in Kenya under the 2015 Act must to be lodged with the Registrar of Companies. The application must contain information prescribed in published regulations to comply with the requirements in respect to the company’s name and the appointment of a local representative and be accompanied by the prescribed fee and the required documents.
Requirements in Respect to Name and Appointment of a Local Representative
In its application for registration of a foreign in Kenya, the company may specify the name under which it seeks to carry on business in Kenya. This may either be the name of the company under the law of the country or territory in which it was incorporated or alternatively the name, other than its corporate name, which the company wants to be its corporate identity in Kenya.
A foreign company is also needed to appoint a local representative in Kenya who not only accepts service of process but also makes sure that the foreign company complies with the requirements of the new law. The local representative is personally liable if a penalty is imposed on the company for a contravention or failure to comply with the Act, if the court hearing the matter is satisfied that the local representative should be so liable.
Documents Required to Accompany Registration Application
Application for registration of a foreign company has to be accompanied by the documents below:
(A) A certified copy of the foreign company’s current certificate of Formation or incorporation or registration in the company’s place of origin, or a document of similar effect;
(B) A certified copy of the company’s constitution (memorandum and articles of association);
(C) A list of the names of the company’s directors and shareholders, and their personal details;
(D) A memorandum executed by or on behalf of the company indicating the powers of directors, if any, who reside in Kenya and are members of a local board of directors;
(E) In respect to any existing charge on property of the foreign company that would be a registrable charge if the foreign company were a company incorporated in Kenya, the documents that would be required to be lodged for registration with the Registrar of Companies;
(F) Notice of the address of the company’s registered office in its Country of origin, if any; otherwise, the address of its principal place of business in its place of origin; and
(G) Notice of the address of the company’s registered office in Kenya.
More Changes Affecting Foreign Companies
Additionally, to the company registration requirements, the 2015 Act introduces, among others, the following changes which affect foreign companies:
(A) Safeguards against the disclosure of a natural person’s residential address where this information is required to be provided by the company;
(B) A mechanism for the appointment of a liquidator of a foreign company in respect of the foreign company’s property in Kenya; and
(C) The recognition that a foreign company may have a local board of directors with specific powers in addition to its foreign directors.
Consequences of the New Registration Requirements
It will be more difficult and burdensome for foreign companies to do business in Kenya in light of the new registration requirements. If a foreign company carries on business in Kenya without registration, the company and each of its officers in default commit an offence and, on conviction, each of them is liable pay a fine of five million shillings.
Foreign Company Winding up under Insolvency Act, 2015
Members’ Voluntary Liquidation under the Insolvency Act, 2015
The Insolvency Bill was assented to by the president on 11th September 2015 and came into operation in 2016.Some of its provisions came into effect on January 18, 2016 by way of Legal Notice No. 1 of 15th January 2016. Some of these provisions include Parts II, VI, VII, VIII, IX, X, XI, XII and the Third and Fourth Schedules of the Act. The relevant part on liquidation of companies is Part VI which is now covered in the above legal notice.
Prior to the enactment of the Insolvency Act, corporate insolvency was dealt with under the Winding-up provisions of the Companies Act(Cap 486 of the Laws of Kenya) (the Companies Act) while the insolvency of natural persons was covered in the Bankruptcy Act of Kenya(Cap 53 of the Laws of Kenya) (the Bankruptcy Act). The attached short write up deals with the procedure for winding up under this new Act, with particular bias to voluntary winding up by member liquidation under new Act
Unlike the previous legislation, the Act seeks to redeem insolvent companies through administration as opposed to liquidation. The Act emphasizes on assisting insolvent natural persons, unincorporated entities and insolvent corporate bodies whose financial position is redeemable to continue operating as going concerns so that they may be able to meet their day to day financial obligations to the satisfaction of their creditors.
Lending financial institutions are usually at the forefront of bankruptcy and liquidation processes where majority have interests as secured creditors. For this reason, it is important to consider how the consolidated Act impacts secured creditors rights with respect to their securities.
Insolvency of incorporated and unincorporated bodies
Liquidation of a Company by order of the Court
Creditors including any contingent or prospective creditors can make an application to the Court for liquidation of company where the company is unable to pay its debts. The liquidator in liquidation has numerous functions and one such function is to ensure that the assets of the company are realized and distributed to the company’s creditors. However, it is important to note that if the assets of the company available for payment of general creditors are insufficient to meet the expenses of liquidating a company, these expenses have priority over any claims to property subject to any floating charge, created by the company and are to be paid out of any such property accordingly.
Where a creditor proves a debt, interest on such debts may also be paid out by the liquidator if surplus permits. However, this interest ranks equally whether or not the debt ranked in priority with other debts.
When a company is in liquidation, the liquidator must make available for the satisfaction of unsecured debts, a portion of the company’s net assets, as is prescribed by the insolvency regulations and may not distribute that part to the proprietor of a floating charge except to the extent that it exceeds the amount required for the satisfaction of unsecured debts.
The Act provides an option for the administration of an insolvent company; pursuant to section 522, the objectives of administration are to maintain the company as a going concern, to achieve a better outcome for the company’s creditors as a whole than would likely to be the case if the company were liquidated and to realise the property of the company in order to make a distribution to one or more secured or preferential creditors. Whereas previously, a company could be wound up immediately it became insolvent, the Insolvency Act now gives the company an opportunity to operate as a going concern and not necessarily engage in the sale and realization of its assets as a primary option.
Appointing an Administrator
An administrator may be appointed by the Court, a holder of a floating charge or by the company or the directors. The administrator is deemed an officer of the Court, whether appointed by the Court or not. With respect to a holder of a floating charge, section 534 of the Act provides that the holder must be a holder of a qualifying floating charge in respect of a company’s property. A qualifying floating charge is one which is created by a document that states that this section of the Act applies to the floating charge or purports to empower the holder of the floating charge to appoint an administrator of the company. The holder of a qualifying floating charge may also apply to Court for an administration order. The Court has the power to make an administration order in respect of a company even if a company may be able to pay its debts.
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